India Plans Auctions for 4 Gigawatts of Wind Power This Fiscal YearBy
Government seeking further declines in cost of green power
Solar auction already produced record-low electricity price
Prime Minister Narendra Modi’s government is seeking to step up the pace of auctioning power-purchase contracts for wind-energy plants, building on a contest that reaped record-low prices for solar farms earlier this month.
The government plans to offer deals covering almost 4 gigawatts of wind capacity in the current fiscal year ending March 2018 in addition to 750 megawatts of solar capacity it will tender next month, Ashvini Kumar, managing director at Solar Energy Corp. of India, the country’s implementing agency for renewable targets, told reporters in New Delhi.
Modi is seeking to expand renewables to help balance India’s burgeoning needs for electricity against efforts to clear the skies of pollution. The government has a goal to install 175 gigawatts of renewable capacity by 2022 and is prodding local authorities to step up the pace of permitting renewables.
“The ministry of new and renewable energy has written to all states to indicate their requirement for green power to consolidate demand, as more tenders would be brought out,” Kumar said.
SECI, which conducted Asia’s first onshore wind auction in February, received bids to supply wind power for 3.46 rupees (5 U.S. cents) a kilowatt-hour, much lower than feed-in tariffs of 4 rupees to 5 rupees prevailing across India’s most windy states.
According to Kumar, the government thinks that 5 gigawatts to 6 gigawatts of wind capacity can be added every fiscal, and companies could be able to reach the government’s goal over the next four years.
Modi’s goal calls for a doubling of India’s wind capacity to 60 gigawatts and a 10-fold increase in solar projects to 100 gigawatts.
SECI already has planned to offer 750 megawatts of solar projects next month in the sunny state of Rajasthan, anticipating that contest will bring record-low bids. The auction structure forces companies to compete for contracts to sell power from renewable energy plants, encouraging them to reduce prices.
“The trend in the market should continue, and I would like to think that the market hasn’t bottomed out," Kumar said when asked if tariffs in the upcoming project could go below the 3-rupees mark.
Timely payments to investors backing green power also will help bring prices lower, the official said. The industry has a guarantee backed by the states, SECI, and the Reserve Bank of India, which is the national central bank. This agreement has been executed with 23 states, and SECI expects the remaining to come on board soon, he added.
India’s green-power ambitions have been at risk from loss-making state-run power retailers that aren’t able to buy enough power and have run behind on payments to several domestic and overseas clean-energy companies, racking up deficits of several hundred million dollars.
The upcoming 750-megawatt solar park is split into a 500-megawatt project offering five contracts to build 100 megawatts and a 250-megawatt piece where investors can bid chunks of at least 50 megawatts.
Kumar said the larger piece was oversubscribed 11 times and the smaller one by 13 times when the bids were submitted by investors on Wednesday. The firms bidding included companies from the Middle East and other locations new to India’s renewables auctions.
Infrastructure development and finance group IL&FS has developed the 500-megawatt solar park by acquiring land for installations and building power evacuation systems, while the same has been done for the remaining 250-megawatt portion by Indian conglomerate Adani group.
The solar park charges for the IL&FS group facility are 4.2 million rupees a megawatt, while that for the Adani group’s park are 3.6 million rupees, SECI General Manager Sanjay Sharma said.